Though given the extraordinary profitability of companies right now, surely not the only factor. Some of those profits could be redistributed to workers. Not sure how to do that without potentially causing damage though.
Can you explain what "damage" it might cause? Giving labor a seat on the board seems like a logical, small step in this direction. Maybe a lower tax rate for Employee Owned Companies (ESOP's) would incentivize owners to spread some of these record profits.
I think you're right, these are good ideas. My concern for damage has to do with the ratio between production and wage. Obviously wage earners should keep more than they currently keep, but the amount they keep needs to be flexible. If the economy tanks or there's a shift in the market, the wage needs to be flexible. I merely advocate for an approach with the necessary responsiveness to a dynamic economy while still improving wages.
> Why should the government take the ideological view of favoring one type of company over another?
Because it does that inherently when it decides what form of business organization to allow in the first place. Corporations are creatures of government, not nature, by creating them and setting standards for what the rules are for governing them it is favoring a particular type of company. But taxing them and then creating a variety of more-or-less tax exempt categories with different behavioral restrictions it is favoring one type of company over others.
Even if it chose not to charter corporations (or similar, newer types like LLCs) and only to allow sole proprietorships and partnerships, that would be favoring one type of company over others.
The question is not whether the government should favor certain forms of business organizations -- there is no way that it can avoid that. The question is what forms it should favor and how.
As "minimum wages across state borders using contiguous counties" (Dube, Lester, Reich) demonstrates (confirmed by Seattle's recent experience), it doesn't cut employment:
In spite of this, an association of restaurant owners in California spent a lot of their own money on these billboards to express touching concern for the employment prospects of their employees:
It's now 4 years later and sadly, their predictions were startlingly accurate. Nearly every restaurant server in San Francisco and Seattle is now an app.
Major consequences to the restaurants. As for the city as a whole, I'd expect to see no new businesses such as light manufacturing locating there unless they have to be there.
And Amazon announced they were locating a second headquarters elsewhere. You could argue that has nothing to do with minimum wage, and probably not since Amazon doesn't have their minimum wage operations in Seattle. But Seattle has done things like passing an unconstitutional income tax targeted at Amazon (now winding its way through the courts) that likely factor in to such decisions. Along with other heavy tax increases, like sales taxes, property taxes, and a proposed "head tax" that appears to be targeted at Amazon.
Higher prices, fewer customers, more automation, fewer restaurants, less willingness to take a chance on marginal employees. More mom&pop restaurants with no employees. More off the books and illegal employees.
Personally, I don't go out to eat in Seattle anymore. Too expensive.
The trouble with most such statistics is context. How much has Seattle's population grown in the same time period? Are there more or less restaurant employees as a percent of the population? Does Amazon's huge hiring surge of highly paid employees skew the results?
Nothing is ever static in economics, it's very hard to do A-B experiments.
Oddly, I didn’t find any of that nuance or context in your original comment. You presented absolutes and the data proved you wrong. Maybe the population has grown by more than 10% in 2.5 years like food service employment. At the same time, the overall unemployment rate has fallen since the wage hikes started.
> You presented absolutes and the data proved you wrong.
I could say an absolute statement that throwing more wood on the fire would make it hotter. If it also happens to drop into the lake, that doesn't prove me wrong. In any such statements, there's an implicit assumption that other effects stay the same, that I am not dropping the fire in the lake.
Seattle has undergone enormous change in the last 5 years due to Amazon. Ignoring that in any cause/effect analysis of the overall city invalidates the analysis.
No, the "trouble" is that exactly the opposite of what you warned would happen actually happened.
What happened was exactly in line with the papers I cited predicted. 1. Large profit hit, 2. small price hike, 3. no effect on employment (employment actually went up, possibly for other reasons).
The reason you believe what you believe is because you swallowed a lot of kool aid. The people concerned about 1 happening want us to think will 3 happen. In Seattle it didn't. In well run studies it didn't.
In propaganda and poorly run economic studies it does.
Yeah, not that one. The one I cited by the UK low pay commission where it found a minimum wage hike was accompanied by a 11% drop in profits and a slight increase in prices (and even then only in the food service industry).
I doubt that anybody has studied the profit drop in Seattle. As an economist, it pays not to look too closely at certain topics and that is definitely one of those topics. It would not help your employability to study that topic at all.
Your employability goes up, however, if your research helps to find results that restaurant associations or "walmarts" with a bit of cash to splash around might find useful.
David Neumark and William Wascher are keenly aware of this, which is probably why they took Card and Krueger's landmark study and twisted it until it showed employment going down after a minimum wage hike.
>Minimum wage hikes are typically a pretty direct transfer from profits to wages, with a minor increase in prices:
This sentiment has always bothered me. It assume that whatever "profit" exists, must continue to exist, nay increase, and that it is a zero-sum game. One could argue that paying your workers more make them eligible to purchase your products ala Henry Ford and the Model T.
Henry Ford raised wages because his staff turnover was killing productivity and because he fell out with his shareholders and decided to spite them. The man wasn't an angel. He was an anti Semite and a Nazi sympathiser ffs.
https://www.bloomberg.com/news/articles/2017-09-19/rising-he...
Though given the extraordinary profitability of companies right now, surely not the only factor. Some of those profits could be redistributed to workers. Not sure how to do that without potentially causing damage though.